Tesco to cut up to 10,000 jobs

Up to 10,000 jobs could go at Tesco as boss Dave Lewis wields the axe in an attempt to turnaround Britain’s biggest retailer.

The scale of the job losses highlights the challenge facing the company as it tries to recover from a slump in sales and profits.

The Telegraph understands that up to 6,000 jobs will go from Tesco’s head offices and 43 stores that it is closing, while the rest of the jobs are at risk from a dramatic overhaul of how the company runs its stores.

Mr Lewis wants to remove an entire layer of management from Tesco shops. The managers affected, who work between the store manager and shop assistants, will be offered alternative roles, but it is not clear if these will be on the same level of pay or even full-time.

The cuts will be compared to Mr Lewis’s overhaul of Unilever in the UK almost a decade ago, when he earned the name “Drastic Dave” for cutting hundreds of jobs and scrapping products.

Thousands of jobs have already been lost in the supermarket industry as the “big four”, Tesco, Asda, J Sainsbury and Wm Morrison, respond to falling profits and the growing threat of the discounters Aldi and Lidl.

Asda announced 1,360 redundancies last year after shaking up its management structure, while Morrisons cut 2,600 jobs in a similar move. Sainsbury’s said in January that it would cut 500 jobs at its offices.

Tesco is the biggest retailer in the country and the biggest private sector employer. It employs more than 310,000 staff across 3,330 stores.

The company began consultations with staff at the end of January. Head office employees have been offered the chance to apply for voluntary redundancy. The final number of job losses will be determined by the result of the consultation process and whether in-store staff accept alternative roles.

Mr Lewis has said he wants to cut head office costs by 30pc and save £250m per year in costs across the business as Tesco looks to fund price cuts and shore up its balance sheet. Tesco will close 43 stores and its corporate headquarters in Cheshunt, Hertfordshire as part of the cost-cutting drive.

Clive Black, analyst at Shore Capital, said Mr Lewis wanted to “simplify” Tesco. He said the company’s structure was that of a global business, which now needed to change given that Tesco has sold its businesses in the US and Japan and must focus on improving trading in the UK.

He added: “Tesco needs to fund material price cuts.”

The latest industry sales figures from Kantar showed that Tesco sales are growing in the UK for the first time in a year. However, the company has already warned that group trading profits in this financial year will not exceed £1.4bn, down from £3.3bn last year, and analysts have claimed Tesco is losing money in the UK at present.

The company is still on the hunt for a chairman to work alongside Mr Lewis, who replaced Philip Clarke last September.

Sir Richard Broadbent said he would stand down as chairman after Tesco became embroiled in an accounting scandal. The company is being investigated by the Serious Fraud Office over the £263m blackhole in its accounts, while the Groceries Code Adjudicator is also examining Tesco’s treatment of suppliers.

John Allan, the chairman of housebuilder Barratt Developments, is the hot favourite to replace Sir Richard after Sir Ian Cheshire, the former boss of DIY retailer Kingfisher, pulled out of the race.

However, City sources have said that Mr Allan is also a contender to succeed Donald Brydon as chairman of Royal Mail, throwing into doubt the prospect of him joining Tesco.

Tesco declined to comment on the job losses.

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Posted on February 16, 2015, in #retail, #uk. Bookmark the permalink. Leave a comment.

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